Coffee Industry Analysis

Topics: Coffee, Customer service, Starbucks / Pages: 10 (2313 words) / Published: Feb 5th, 2014
Grinder’s Coffee Shop and the Coffee Industry

Primary Company:

Grinders Café

Competitors:

1-Italian Gourmet Market
2-Starbucks
3-Port City Java
4-Dunkin Donuts

1. The Coffee Shop Industry Analysis:

Threat of New Entrants:
The coffee industry is one of the world’s largest commodities, produced in over 70 countries and employing nearly 20 million people. The United States accounts for approximately 20,000 coffee shop businesses with revenues totaling $10 billion in 2011 and on an upward trend, according to the Small Business Development Center (SBDC). Industry analysis, conducted in 2012, found the coffee industry to be controlled by the top 50 companies, which account for 70% of the sales. The remaining 30% of sales are distributed among mom-and-pop coffee shops and coffee retailers such as grocery chains, convenience stores, and restaurants. There are few barriers to entry, but the industry remains highly competitive and concentrated among industry giants. However, despite the 70% franchise control on the industry, there are opportunities for new firms emphasizing on the specialty coffee market and “on-the-go” Americans. Startup cost for a small coffee shop can be as little as $20,100 with a growing opportunity to partner with large franchise firms such as book stores, shopping centers, food venders, and housing communities.

Inter-firm Rivalry:
The U.S. National Coffee Drinking Trends 2013 report concluded coffee consumption increased by 5% from 2012 to 2013 with 83% of Americans acknowledging they consume coffee on a daily basis. Hispanic Americans were found to consume Espresso-based beverages at twice the rate of other groups on a daily basis. Owners of coffee shops, understood to be “single cup brewers,” increased by 12% in 2013, increasing competition in the already highly competitive industry. Researches also reported a strong increase in consumer demand for specialty coffee drinks such as cappuccinos, lattes, Americanos

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